The Tories will on Thursday intensify their attack on Labour for presiding over "broken Britain" when they claim that 5 million people have never worked under the current government.

Theresa May, the shadow work and pensions secretary, will accuse Labour of creating a wall between the "working and the workless" to hide its failure to provide opportunities for the long-term unemployed.

In a speech to the Policy Exchange think tank, May will say that the last census in 2001 showed that 2 million people had never had a job, while a further 3 million had not worked under this government.

May will say: "These are people that have been hidden away by Labour for the past 10 years. They have slowly built a wall between the working and the workless, hoping to keep their failures out of sight.

"The reality is that under Labour there has been a steady growth in welfare ghettos – unemployment did not disappear during the 'boom years'. It was merely disguised, renamed, and hidden away in ever growing pockets of poverty. There are stark figures to back this up: the latest census data shows 2 million people in this country have never had a job. Almost 3 million people have not worked under this Labour government."

May's speech is one of the main events in what is being dubbed "broken Britain week" by the Tories, as the party highlights the costs of social breakdown. Chris Grayling, the shadow home secretary, today claimed that some inner city areas were so blighted by criminal gangs that they resembled The Wire, the cult US television series about crime in Baltimore.

Labour dismissed May's speech tonight. Jim Knight, the employment minister, said: "This is two-faced nonsense from the Tory party who deliberately pushed people on to sickness benefit and on to long-term worklessness in the 80s and 90s, and are now opposing our investment and reforms that are getting people back into work.

"The facts are that there are 2.5 million more people in work now than in 1997 and before this recession the jobseeker's allowance claimant count was at its lowest ever level. Our reforms have been reversing the damage of the Tory years."

The Tory attack comes amid signs of ministerial divisions over government spending plans. A report in the Independent said that Gordon Brown plans to issue a list of spending cuts before the election as he moves away from his claim that voters face a choice between Labour investment and Tory cuts.

No 10 sources distanced themselves from the article. But some ministers, notably Lord Mandelson and Alistair Darling, believe the government needs to offer the electorate a choice between compassionate cuts under Labour and swingeing cuts under the Tories.